Last week we announced the release of “Enabling the Future of Applications: The Stackato Vision.” This video describes how the nature of information technology is changing -- from automating business-supporting processes to being the business offering itself. Using IDC’s Third Platform concept as a framework, we identify the critical success factors necessary to be a Third Platform company and present examples like Uber and Airbnb.
If you’re not familiar with IDC’s Third Platform, it represents the confluence of four technology trends -- social, mobile, big data, and cloud computing -- that in combination enable an entirely new class of application -- and a new way of doing business.
In the Stackato Vision we also discuss the capabilities an IT organization requires to perform as a Third Platform company: business agility, technical innovation, and infrastructure choice.
One of the things we emphasize in the Stackato Vision is the importance of business agility -- or, put another way, if an IT automation strategy is perceived by corporate executives as merely improving IT processes without delivering real business change, it is likely to be a non-starter. Simply stated, businesses won’t make the investment in a DevOps initiative unless convinced that it will improve business outcomes.
The key business agility requirements to be a Third Platform company are:
- Time-to-market acceleration
- Rapid Prototyping
- Flexible partnering
- Internet of Things/Internet of Services support
While bringing applications to market more quickly is clearly fundamental to the Stackato vision, it is not nearly sufficient to compete in a Third Platform world. Also critical are the ability to easily experiment with new offerings and business models; to rapidly prototype new offerings to validate market potential; to support innovative partnering opportunities that allow companies with complementary products to create joint offerings; and support for IoT/IoS products and services, necessary for a world quickly infusing IT into every product and service.
The week also brought the announcement of an offering that, to my mind, almost perfectly embodies the Stackato Vision: Amazon Dash. Dash is a simple thumb-sized device designed to enable single-item orders from Amazon at the push of a button. Here is a picture of an Amazon Dash device:
In this example, the Dash device is for Tide detergent. The notion is that you would place a Tide Dash device on your washer (it’s magnetized) and, when you were nearly out of washing powder, you’d press the button and presto -- more Tide magically appears at your door two days later (via your subscription to Amazon Prime). The Dash announcement video engendered quite a bit of discussion, with the New Yorker finding it a bit creepy, while MacWorld’s Glenn Fleishman finds Dash intriguing but is unsold on the concept. The Wall Street Journal also weighed in on Dash with a humorous presentation -- what if you repeatedly pressed the button -- would you end up with a garage full of Tide? (The answer is no, the service removes extra orders submitted by multiple button presses).
The Dash service is comprised of more than just a magnetized ordering button, however. Another version is contained in a wand that can scan and order products based on scanning their barcodes, or even by listening to someone speak the product’s name. And, finally, Dash will in the near future bypass the need for a separate device altogether by being embedded into products, so that, say, your washing machine would note it’s low on washing powder and automatically reorder more.
Along with the button or wand, Amazon offers a mobile app that allows you to view pending orders and approve or remove them, thereby allowing users to avoid the potential inconvenience of having their toddler (or worse, their pet!) order something. If an order is not reviewed and approved or killed within a certain period of time, it is automatically approved and placed by the Dash service itself.
Many retailers have been disrupted by Amazon’s ecommerce service -- think Borders and Circuit City, for example. But other retailers like Wal-Mart have finally begun to respond strongly to Amazon via their own beefed-up ecommerce services. But with Dash, Amazon is changing the ecommerce rules once again -- to its advantage and to the disadvantage of all other retailers, both bricks-and-mortar and online.
The ingenuity of the Dash offering is hard to overstate. With one fell swoop Amazon has taken ecommerce to the next stage -- removing the need for computer interaction altogether and placing itself directly in the consumer’s day-to-day activities, making purchasing decisions and transactions friction-free.
The importance of reduced friction is under-appreciated. In the Stackato Vision video we note that Uber has not only disrupted the taxi industry, but in San Francisco it now realizes three times the revenue of the taxi industry. By being a more convenient transportation mechanism it uncovers use cases (and thereby revenue) that the traditional incumbent providers were unable to service.
How Dash Embodies the Third Platform
First and foremost, it clearly aligns with the ongoing trend toward mobile, with its mobile application. However, as I note in the Stackato vision video, mobile is a misnomer -- this is really a stand-in for the plethora of hardware devices that will make up our future computing platforms. Each Dash button and wand is an IoT device, with the appliances that will one day be part of the Dash service merely representing really large, immobile Dash devices.
Obviously, Dash’s backend service runs on AWS, making the connection to cloud computing quite clear. Given the potentially very large user populations (every washing machine across the planet?) and the highly erratic nature of the transactions (lots of laundry done on the weekend, but probably not much on Monday evenings), using a cloud service like AWS is critical to ensure the Dash service works flawlessly with no chance of downtime or poor availability.
Dash is also part of a much larger Amazon push toward analytics, with this AdAge article pointing out that the service offers CPG companies better insight into product users and their habits. So Dash ticks the Third Platform analytics box.
As to social media, it’s more of a mixed bag. Amazon is extremely strong at letting its customers interact via product text and video reviews, and is renowned for its customer service, but it does not interact with its customers to any great extent on social media. It is an intriguing thought experiment to consider how Amazon might make Dash even better with a more integrated social media component.
In sum, Amazon Dash is a strong Third Platform offering. However, where it gets really interesting is in the area of business agility, which, as I noted above, is one of the areas that comprises the Stackato vision. When you look in this area, you get a real sense of how Amazon is leveraging the Third Platform to achieve business advantage.
As in most Amazon offerings, Dash was undoubtedly brought to market quickly. The company is well-known for its rapid innovation and creativity. It’s in the other aspects of business agility, though, that Dash is really powerful.
Now that the Dash infrastructure is built, it facilitates experimentation and prototyping. It will be easy for Amazon to extend Dash to additional devices beyond the button and wand, giving Amazon the chance to prototype new solutions very quickly.
As previously noted, the entire Dash offering is IoT/IoS-based and indicates why these technologies will be so important going forward.
And while Dash clearly facilitates experimentation, prototyping, and IoT/IoS, it’s when we look at business partnerships that its game-changing capability comes into focus. The Dash button and wand clearly facilitate easy ordering, but the partnerships that are implemented in them are extremely powerful, for the following reasons:
- As the AdAge article mentions, the buttons represent the ecommerce equivalent of endcap displays -- the end of aisle promotions seen in grocery stores. This means that Amazon and the product providers are working together to build mutually beneficial offerings.The net effect of Dash will be to reinforce brand loyalty, something every product producer is trying to increase.
- The next-gen Dash offering -- where the service is built into products themselves -- helps both parties. From the product provider perspective, Dash will make their products more convenient to use and thereby carry superior differentiation versus other providers. From Amazon’s perspective, this locks users into its ecommerce service and precludes use of competitive services.
- The overall Dash service creates a new ecosystem of consumer value creation and thereby makes the partnerships between Amazon and the product providers more important, which has the inevitable result of reducing the importance of other retail distributors like Wal-Mart.
While we didn’t have Amazon Dash as an example when we were developing the Stackato Vision, it is a perfect illustration of the power of the Third Platform and the kind of business agility a company can achieve when embracing it. If you haven’t heard of the Stackato Vision, please read the blog post announcing its release, and then watch the Stackato Vision video itself. When you’ve done that, get in touch with us so we can help you explore how to turn your company into a Third Platform business.